Landlord Sweeteners Continue in Manhattan’s Luxury Rental Market

Almost 30% of luxury leases came with concessions in April, brokerage finds

Almost 30% of Manhattan's luxury leases came with concessions in April.
Nisian Hughes/Getty Images

Almost 30% of Manhattan's luxury leases came with concessions in April.

Nisian Hughes/Getty Images

Manhattan’s luxury rentals continued to trend downwards in April, with median monthly rent dropping to $7,995, a 6.3% decrease from a year ago, according to a report released Thursday by national brokerage Douglas Elliman.

Compared with the previous month, April’s median rent fell 11.1%, or an equivalent of $1,000, for the luxury segment, which the firm defines as the top 10% of the market, starting at $6,295.

To convince prospective renters to sign leases, landlords of luxury apartments offered an average of 1.2 months free. And 29.3% of all luxury rentals had concessions, compared to 28.6% of rentals in the overall market, according to the report.

The overall median rent in Manhattan reached $3,417 in April, representing a 0.1% increase year-over-year. It was up 0.5% from March.

"For the last year, the Manhattan rental market, much similar to the sales market, remained soft on the top and tight on the lower end," said Jonathan Miller, chief executive of real estate appraisal firm Miller Samuel and author of the report.

Oversupply of luxury rental units is, in large part, responsible for the discrepancy, according to Mr. Miller. "Lots of new rental condominiums have been built during the five-year construction boom since 2012. Plus, a quarter of new developments for sale were investment properties, which owners generally put on the rental market," he said.

Meanwhile, more luxury renters seeking deals outside Manhattan pushed prices higher in Brooklyn and Queens. In April, the top 10% of the rental market in Brooklyn had a median rent of $5,651, a 5.6% increase year-over-year; luxury rentals in Queens had a median price of $4,581, jumping 16.5% from a year ago.

Looking ahead, smaller and less expensive apartments will remain hot commodities throughout the remainder of the year, Mr. Miller predicted, thanks mostly to population growth and the static supply of low-to-medium-priced housing stock.

This trend was further evidenced by a separate rental market report by Citi Habitats on Thursday. In April, the Manhattan vacancy rate fell to 1.78%, the lowest level since August 2016.

Overall, Manhattan apartment rented for an average of $3,512 in April, slightly more than a year ago, according to the report.

"Although their rise slowed when compared to March, rents continued to hold steady," Gary Malin, president of Citi Habitats, said in an email statement.

"We are beginning to enter a traditionally busy time of year, so it will be interesting to see if market conditions continue to shift as we enter summer."

In terms of sub markets, Citi Habitats identified SoHo/Tribeca and Gramercy/Flatiron as the top two priciest Manhattan neighborhoods for renters in April, with median rents of $5,997 and $4,535, respectively. The least expensive is Washington Heights, with a median rent of $2,275 per month.

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